RGM.L Regulatory News (RGM)

Regency Mines plc

(''Regency'' or the ''Company'')

Final Results

For the year ended 30 June 2012

3 December 2012

Dear Shareholders,

A year ago we wrote that we hoped in twelve months to be reporting a year that had been transformative in the history of the Company. This we based on two expectations. First we expected that the drill programme, then under way at Mambare in Papua New Guinea, would give us a first declared Mineral Resource Estimate on this nickel-cobalt project early in 2012. Secondly, we anticipated that our partner, Direct Nickel Pty Ltd, in which we are also a shareholder, would have successfully operated its pilot plant and demonstrated its nickel treatment technology and would have listed its shares on the Australian Stock Exchange.

Over the first of these we had some control and the timetable was met. On the second, we had no control and Direct Nickel's timetable was delayed due to difficulties in funding. In a poor market environment, the transformation we looked for in perceptions of the Company would have required everything to go right; the Mineral Resource declaration, a successful piloting of the technology, and a listing of Direct Nickel, itself would have been a mutually reinforcing set of developments.

The year was still one of success because the first of our expectations was more than fulfilled. Our exploration joint venture at Mambare achieved excellent results that demonstrated the scale and potential of the project from results in just one part of it. While we had targeted a Mineral Resource Estimate of at least 30 million tons at near 1% nickel, the outcome was more than five times higher, with 162.5 million tons at 0.94% nickel and 0.09% cobalt.

The Company's Australian subsidiary, Regency Mines Australasia, also conducted effective exploration during the year and identified or applied for licenses with recognised potential for gold, base metals and graphite in areas of high exploration interest.

The year was one of progress and one of delivery, so far as geology and exploration were concerned, but was a disappointment in terms of the valuation of the Company on the markets.

Financial discussion

From a restated pre-tax profit of £1,839,705 in the year to 30 June 2011, there was a decline to a loss of £2,112,350 in the year under review. This swing was principally due to a shift from profit to loss at our associate company, Red Rock Resources plc, and a loss, instead of profit, on dilution of our interest in that company. Earnings per share fell from 0.4 pence to -0.32 pence.

Total shareholders' equity fell from £14,138,048 to £10,245,898 largely as a result of these losses. A reduction in share issue proceeds from new issuance of shares from £6,740,753 to £907,090 reflected the Company's recognition of the unfavourable funding environment and its expectation that the announcement of a favourable JORC Mineral Resource Estimate would lead to a rerating of the shares. This did not occur and since the balance sheet date, the Company has therefore raised a further £1,307,500 and $250,000 (£158,850) through the issue of shares.

The Company saw its traded price during the year fall from 3.16 pence at 30 June 2011 to 1.6 pence at 30 June 2012.

Strategic discussion

We have described our strategy in the past as one of developing a base metal and industrial commodity group. Whereas the iron ore and gold interests of our associate company Red Rock Resources plc are the major and representative industrial metal and precious metal to the world economy, and so there is always some interest in them, base metals are different. To the normal exploration, market and cyclical risks are added to the fact that periodically the market loses interest completely in any particular base metal, and then picks it up later like an abandoned plaything.

We also decided to aim as far as possible at identifying and developing assets that had the potential to be of major scale, on the grounds that this leveraged our effort and resources more effectively.

To counteract the cyclicality we foresaw in this business, we had two approaches. Besides seeking reduction of risk through a mix of metals (initially copper and nickel) and areas (Australia and Papua New Guinea), we always described ourselves as having a mining transactional, investment and deal-making business that was intended to leverage any skills and expertise we thought we might have in order to create supplementary revenue streams or to lay off risk or financing burden. It might seem presumptuous for so small a company to present itself as aiming at some of the characteristics of a mining finance house, but we did help several companies come to the AIM market in our early years, including our associate Red Rock Resources itself. We also give a great deal of attention to deal structure when we negotiate any new participation.

We also try to apply new thinking to old problems in order to see where value might be added. It was this that led us to identify the potential effect of new technology on nickel laterites, that form so important a part of the world nickel endowment but a much lesser part of production. After much consideration, we decided to form a partnership with the Australian-based Direct Nickel Pty Ltd, in which we have a 7.5% investment after its recent reversal into the renamed Direct Nickel Ltd.

Direct Nickel also is our exploration and capital partner in our large nickel-cobalt laterite project at Mambare, and that joint venture also holds licences for the Direct Nickel technology, which has just started pilot plant testing in Perth, WA.

Our intention was to add value by linking a deposit of, what we consider to be, massive potential with a ground-breaking technology, and we liked the technology for its conceptual elegance, apparent efficiency and environmental benefits. As we have worked with Direct Nickel, a further economic aspect has come to seem important. When we look at the costs of production of sulphide and lateritic deposits of nickel, it is apparent that the real advantage some sulphide deposits have had is valuable by-product revenues, without which they are often uneconomic, whereas lateritic nickels processed by the sulphuric acid routes have typically only had cobalt credits of any value. A process route for laterites that created valuable by-products besides cobalt would be a significant development and the Direct Nickel process may have potential for this.

We continually review opportunities to involve ourselves in commodities and projects with the scale potential and low entry cost to provide diversification of risk and the opportunity of leverage. Given the long-term payback from development of a major nickel project, we will focus on projects with the opportunity for short term addition of exploration value and a ready market for realisation.

Operations

Mambare was identified early as the project with most scale potential in our portfolio and in order to obtain recognition of this in the marketplace, it was essential to drill out a declarable Resource. Market conditions did not allow us to do this at the same time as pushing forward our other projects at full speed and yet we did not want to be dependent on one project and the success of one exploration programme. We therefore concentrated in the year under review on the joint venture drill programme at Mambare, but at the same time carried out light but focussed exploration in Australia, designed to give us the maximum of results for the minimum of cost. We retained our long-term strategic investment on Oracle Coalfields plc, which is developing a coal project in Pakistan that has both scale, and potential for the application of technology, and so as a toe in the water of a possible diversification fitted our strategy. Oracle made technical progress but its share price suffered severely during the year as a result of market conditions and negative sentiment towards Pakistan.

Our exceptional exploration results at Mambare resulted in a large Resource being declared from only a small part of the licence area. Mambare will now be recognised internationally as a major potential nickel project and we and Direct Nickel will focus on bringing in a substantial capital partner in the course of 2013.

Direct Nickel has now announced the good news of the first ore charge and first slurry at its pilot plant as it begins operations. As this plant moves into hot commissioning and testing, we can look forward to receiving a succession of result announcements from them in the course of 2013.

In Australia, work was carried out that identified significant potential in several of our licences and new areas were applied for. We believe we have identified significant graphite potential near Munglinup adjacent to and surrounding the old Halberts mine held by our neighbours. We are looking to form alliances with parties willing to aim at early production in order to speed up the pace of activity here in 2013. We have already announced a tie-up with RAM Resources Ltd (RAM), an Australian listed company, which has approved the issue to us of 155 million shares in exchange for 10% of our Fraser Range tenements, which are near the important recent base metal discovery at Nova and are prospective for base metals and gold. Following preparation of a fair and reasonable opinion and dependent on a shareholder vote and rights issue funding (all by RAM shareholders), we will be issued further shares and will become major shareholders of RAM. We look forward to undertaking early exploration in this exciting area.

We have exercised the option to progress with agro-mineral exploration work in Sudan. This will be a measured programme, which in the early stages will be designed to achieve a great deal of information for minimal cost. There is considerable interest in the agro-mineral potential of Sudan, and discussions on potential capital tie-ups are already under way.

Sustainable development

Papua New Guinea is an unspoilt and biologically diverse environment. We and our partners have always acted carefully to ensure that our exploration has minimal impacts and that we restore the natural environment, or leave it in a position quickly to restore itself through plant growth, at the end of each exploration phase.

My colleague Ed Bugnosen, who is acting as project manager of the Mambare joint venture this year, has worked extensively in the past on sustainability issues and was formerly seconded by an international agency to work at Papua New Guinea's Mining Haus in an advisory role. Ed's cultural awareness and industry are important factors in our continuing relationships with local communities and government agencies. We shall look to development of our CSR programmes in Oro Province, Papua New Guinea, in 2013.

Our joint venture local company in Papua New Guinea continues to progress licence applications over areas of geothermal potential. In Regency's own name, we have applied for gold-prospective licences in other areas of Papua New Guinea.

Personnel

We are grateful for the contribution our staff have made to the business over an often challenging year. Likewise, we appreciate the ongoing support and loyalty of our shareholders.

Outlook

2013 will be the year when we reap, we believe, some of the benefits from earlier expenditure. Without further spending by us, there should be results from the Direct Nickel pilot plant. RAM Resources will, we hope, explore with funds raised from third parties. Partners will, we expect, come in to help develop our graphite.

A key aim and performance indicator for us as management in the current year will be to build the financial strength of the Company and reduce our dependence on capital markets.

Results and dividends

Regency and its subsidiaries (the ''Group'') made a post-tax loss of £2,026,549 (2011: post-tax profit £2,142,986).

The directors do not recommend the payment of a dividend.

The following financial statements are extracted from the audited financial statements which were approved by the Board of Directors and authorised for issue on 30 November 2012.

Consolidated statement of financial position

for the year ended 30 June 2012

Consolidated income statement

for the year ended 30 June 2012

Consolidated statement of comprehensive income

for the year ended 30 June 2012

Consolidated statement of changes in equity

for the year ended 30 June 2012

The movements in equity during the period were as follows:

Consolidated statement of cash flows

for the year ended 30 June 2012

1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company.

Company Statement of Comprehensive Income

As permitted by Section 408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company's loss for the financial year was £1,388,214 (2011: loss £1,103,424). The Company's other comprehensive expense for the financial year was £380,956 (2011: income £572,254).

Amendments to published standards effective for the year ended 30 June 2012

The following standards have been adopted during the year:

• IFRS 7 "Financial Instruments: Disclosure (amendment); and

• IAS 24 "Related Party Disclosures (revised)".

Although the adoption of these amendments has had no impact on the financial position and performance of the Group, additional disclosures have been provided to comply with the revised standards.

Standards adopted early by the Group

The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.

Adoption of standards and interpretations

As at the date of authorisation of these financial statements, there were standards and interpretations in issue but that are not yet effective and have not been applied in these financial statements, as listed below:

Standards, amendments and interpretations in issue but not effective

Effective for annual periods beginning on or after 1 January 2012:

• IAS 12 "Income Taxes (amendment)".

Effective for annual periods beginning on or after 1 January 2013:

• IFRS 10 "Consolidated Financial Statements";

• IFRS 11 "Joint Arrangements";

• IFRS 12 "Disclosure of Interests in Other Entities";

• IFRS 13 "Fair Value Measurement";

• IAS 19 "Employee Benefits (revised)"; and

• IAS 28 "Investments in Associates and Joint Ventures".

Effective for annual periods beginning on or after 1 January 2015:

• IFRS 9 "Financial Instruments: Classification and Measurement".

The Directors do not anticipate that the adoption of these standards and interpretations in future periods could have a material effect on the financial position or performance of the Group and Company, [other than the introduction of IFRS 10 which could affect the financial position and performance and IFRS 11, IFRS 12 and IAS 28 which are likely to change or increase the level of disclosure required in respect of the Group's investments. The Group intends to adopt these standards when they become effective.

IFRS 10 is a new standard which establishes principles for the presentation and preparation of consolidated financial statements. As a result of its publication, the Directors will be required to consider the application of the revised definition of control to determine whether additional entities will need to be consolidated and whether consolidation is still appropriate for those that currently are.

The new definition of control will require the directors to consider whether the Company has:

a) power over the investee;

b) exposure, or rights, to variable returns from involvement with the investee; and

c) the ability to use power over the investee to affect the amount of the investor's returns.

The financial effect of such changes on the Group has not yet been reliably estimated. However, it is widely expected, irrespective of industry sector and without specific reference to the Group, that the adoption of IFRS 10 is likely to result in more entities being consolidated.

IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly-controlled Entities - Non-monetary Contributions by Venturers". It removes the option to account for jointly controlled entities ("JCEs") using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. JCEs under current IAS 31 that will be classified as joint ventures under IFRS 11 will transition from proportionate consolidation to the equity method by aggregating the carrying values previously recorded, testing that amount for impairment and then using that amount as deemed cost for applying the equity method going forward. The Group recognises its interest in jointly controlled entity using the equity method of accounting. The application of this new standard will not impact the financial position of the Group.

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures related to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. The adoption of IFRS 12 is likely to change or increase the level of disclosure required in respect of the Group's investments.

As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 "Investments in Associates and Joint Ventures" and describes the application of the equity method to investments in joint ventures in addition to associates. The application of this new standard will not impact the financial position of the Group.

2 Earnings per share

The basic (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue.

Diluted (loss)/earnings per share is derived by dividing the (loss)/profit for the year attributable to ordinary shareholders of the Parent by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

The following reflects the (loss)/profit and share data used in the basic and diluted earnings per share computations:

The weighted average number of shares issued for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:

In accordance with IAS 33, the diluted earnings per share denominator takes into account the difference between the average market price of ordinary shares in the year and the weighted average exercise price of the outstanding options. The Group has weighted average share options of 22,763,661 for the current year which were not included in the calculation of diluted earnings per share because they are non-dilutive for the year presented.

3 The consolidated statement of financial position at 30 June 2012 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2012 statutory financial statements. The auditors have reported on the 2012 financial statements; their report was unqualified and contained no statement under sections 498(2) or (3) of the Companies Act 2006. The financial statements for 2012 will be delivered to the Registrar of Companies by 31 December 2012.

4 A copy of the Company's annual report and financial statements for 2012 will be made available on the Company's website www.regency-mines.com shortly and at the Annual General Meeting on 31 December 2012; in addition the Annual Report will be posted to the Shareholders.

Enquiries: